Mechanical Breakdown Coverage: Hassle-Free Modern Motoring

Life is full of “what-if” scenarios. If you’re the worrying type, you could entertain all kinds of catastrophes about being dumped, getting fired, or losing all your money in the stock market. But if you have the right insurance policy, you shouldn’t have to worry about unexpected car repair bills. This is where mechanical breakdown insurance comes in.

Statista reports that there were 272.48 million cars registered in the U.S. as of 2017. That works out to 1.88 vehicles per U.S. household. Many of those vehicles will experience breakdowns or parts failures that aren’t covered by standard auto insurance. Issues can range from a $150 fix when the check engine light turns on, to a transmission failure that sets you back $5,500. 

[Note: we do not receive any commissions or other financial gain from the companies mentioned below.]

Mechanical breakdown insurance covers repair costs 

If you don’t have $6,000 sitting around just in case your engine block falls out, those surprise expenses can break the bank. Fortunately, there is a solution: mechanical breakdown insurance, or MBI. It protects you against those big, unexpected bills from your mechanic.

MBI is a true insurance product, serviced by insurance carriers like Geico, Allstate, and others. It fills a gap between what’s covered by your standard auto policy and what’s covered by your manufacturer’s warranty. 

What mechanical breakdown insurance covers 

The first thing to know about MBI is that policy terms can vary wildly. One plan might cover a specific list of car systems and components, while another might have a more comprehensive, “bumper to bumper” style of coverage. You might even see this range of options from the same carrier.

Endurance, for example, has five different plan levels. At the low end is Endurance’s Secure plan, which only covers repairs related to the drive axle, engine, transfer case, transmission, and turbocharger or supercharger. 

By comparison, Endurance’s highest level of coverage, the Supreme plan, protects these parts and systems:

• Air conditioning 

• Brakes

• Cooling system 

• Drive axle

• Electrical components 

• Engine 

• Suspension 

• Fuel system 

• Gaskets

• Steering 

• Transfer case 

• Transmission 

• Turbocharger or supercharger

And if that’s not comprehensive enough, you can optionally add coverage for your car’s modified suspension and high-tech equipment, like the backup camera and lane-departure warning systems. 

Most carriers don’t offer as many plan choices as Endurance. Geico, for example, has only one coverage level, but it covers all mechanical parts of the car that aren’t covered by the manufacturer’s warranty. 

What mechanical breakdown insurance does not cover 

Before you get too excited about MBI, know that every policy has some standard exclusions. Mechanical breakdown policies won’t cover routine maintenance — like oil changes — or any repairs related to an accident. Repairs resulting from fire, hail, rain, windstorms, floods, and earthquakes aren’t covered either. And your carrier won’t pay for damage caused by driver error, poor maintenance, or misuse of the vehicle. In other words, you have to take care of your car to get the most value from your MBI policy.

Another standard exclusion is any pre-existing condition. The insurer enforces this by defining a waiting period, which is how long the insurance must be active before you can file a claim. 

In addition to these broad exclusions, each policy will list specific parts or systems that aren’t covered, such as:¹ 

• Suspension alignment 

• Wheel balancing 

• Filters

• Hoses 

• Lubrication 

• Coolant and fluids

• Spark plugs

• Shocks

• Batteries

• Exhaust components 

• Carpet and upholstery

• Convertible tops

• Door handles and liftgate handle 

• Brake pads and linings

• Brake shoes

• Tires 

• Wheels

• Tire pressure sensors

As you can see, these exclusions are mostly “wear and tear” items that tend to go out or get damaged over time.²

Extra perks of mechanical breakdown coverage 

Being insulated against expensive repairs is great, but your mechanical breakdown policy can save you in other ways too. Most insurers add in some perks to sweeten the deal. You might get free roadside assistance, car rental reimbursement, towing, trip protection, or no cap on claims. More comprehensive plans might also throw in identity theft protection, access to repair financing, free tire replacement, or free key fob replacement. 

MBI vs. extended warranties vs. vehicle service agreements

At this point, you might be thinking that mechanical breakdown insurance sounds a lot like an extended warranty. And you’re right. MBI, extended warranties, and vehicle service agreements are all designed with the same goal: to help you manage repair costs for your car. 

There are key differentiators with MBI, though, that many car owners appreciate: 

• MBI is only offered by insurance companies. 

  For that reason, MBI is subject to more consumer-protection regulations than extended warranties or vehicle service agreements. 

• MBI has a more flexible structure than an extended warranty. 

  MBI is structured like an auto insurance policy with six- or 12-month terms. Usually, you can make payments or pay in full. More importantly, you can drop the coverage at policy renewal if you don’t want it. Extended warranties and vehicle service contracts, on the other hand, have one flat fee that’s payable upfront. And, the coverage is in force for a longer period of time, say three or five years. Plus, if you purchase the extended warranty at the dealership, the cost gets rolled into your auto loan — making it even more expensive. 

• MBI lets you choose your repair shop. 

  Most MBI policies let you pick your own repair shop. Extended warranties and service contracts typically require you to use the dealership for covered repairs.

Mechanical Breakdown Coverage FAQs 

9 Questions to Ask When Shopping for Breakdown Coverage

To ensure you get the right MBI policy, you’ll want to ask these nine questions. 

1. What is the holding period?

The holding period defines how long you must wait after initiating coverage to put in a claim. Holding periods are in place because MBI won’t cover pre-existing conditions. Expect the holding period to be at least 30 days and 1,000 miles. 

2. What is the cancellation policy?

At a minimum, you’d want the right to cancel without penalty at the end of the policy period — which should be no longer than 12 months. Some programs may even offer a money-back guarantee in the first 60 or 90 days, available to policyholders who don’t file a claim. 

3. What repairs are covered? 

Ask the carrier for a detailed list of services covered by the policy, along with specifics on parts and labor coverage. Then, use that list to: 

1. Comparison-shop your options and, 

2. Determine if the coverage is redundant to your manufacturer’s warranty. 

You might also research the systems and components that most commonly fail in your vehicle’s make and model. Then you can optimize the odds by finding an MBI policy that specifically covers those items.

4. What are the exclusions?

Don’t get caught off-guard by exclusions. Read the policy documentation carefully to understand how your policy works (or doesn’t work). You may need to ask the insurer to give you specific definitions for terms like “wear and tear” and “weather-related damage.” If something isn’t crystal clear to you, then question it. The more you clarify now, the better experience you’ll have with your MBI overall. 

5. What are the premium and deductibles? 

Verify the premium, the policy period, and the deductible. These factors, along with the covered services and exclusions, tell you how much value a particular policy provides. Also, find out what options you have for paying the premium. Most insurers will allow for monthly or quarterly payments versus a single payment upfront. 

6. Can I renew the policy? For how long? 

Ideally, you want the option to keep renewing your policy for several years. Most insurers allow for renewals until the car is seven years old or has 100,000 miles. 

7. How do I file a claim?

Find out what the claims process is. Ideally, the insurer will have a robust claims processing division that’s open 24 hours a day, seven days a week. Also, ask if the claims process differs when you’re out of town on a road trip. 

Verify the claims payment process as well. Does the insurer reimburse you or pay the repair shop directly? If it’s a reimbursement, you’ll want to know how long those payments take. 

8. Can I go to any repair shop? 

Confirm that you have the freedom to take your car to any shop for repairs. Some insurers may discount your deductible if you go to an approved service provider. 

9. Is MBI coverage transferable?

When a policy is transferable, it can be reassigned to a new owner who purchases your car from you. Transferable coverage provides more than repair reimbursement — it increases the value of your car. Find out if the MBI policy is transferable and, if so, how to request a transfer. 

Ultimately, mechanical breakdown insurance gives you peace of mind by offering an extra safeguard against pricey auto repairs. It’s often quite affordable, which makes it a nice strategy to hedge against those worrisome “what-if” scenarios. MBI also tends to be more flexible than the extended warranty coverage you’d buy from a car dealer. 

Coverage and costs can vary widely, though. So, shop around and read that policy documentation! Reading the contract may sound like a terrible way to spend your time, but it’s better than paying premiums for coverage you don’t fully understand.